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The Bigger Picture

The Bigger Picture

Implementing new technologies, responding to user requests-these are inevitable parts of the CIO's job. But the role of the CIO continues to evolve, and one trend is clear: The position is becoming focused less on technical matters and more on strategic planning. A recent study by Korn/Ferry International, an executive search firm based in New York City, highlights this transformation.

Based on the responses of 340 CIOs in the United States, the United Kingdom, France and Germany, Korn/Ferry predicts that CIOs will spend a growing amount of time on long-range planning and less time on more immediate, tactical concerns. In addition to technical and engineering qualifications, today's CIOs need experience in finance, marketing and strategic planning as well. CEOs are paying increasing attention to innovation, knowledge management, customer relationship management and other new business drivers, and IT is indispensable in getting the associated projects off the ground.

CIO recently invited several prominent IT leaders from different industries to discuss the position's ever-growing role in long-range planning. Along with Senior Editor Christopher Koch and Senior Writer Mindy Blodgett, the participants include Gary Banks, former vice president and CIO at Xerox,; Gary Hamel, chairman of consultancy Strategos and a visiting professor at the London Business School; Bernard Mathaisel, then executive director and CIO at Ford Motor in Detroit, and now corporate vice president and CIO of Solectron; Steve Sheinheit, executive vice president of corporate systems and architecture at The Chase Manhattan Bank in New York City; and Patrick Zilvitis, vice president for corporate IT at The Gillette in Boston. The discussion began with a look at the challenges the four IT executives were facing at the time.

Different Industries, Similar Challenges Gary Banks: This is an interesting time for Xerox-it's really moving on into the next generation of the company. One [change] is the emphasis on solutions [rather than] standalone products. Xerox is a lot more than a copier company, and those solutions are global over geographic. So [the company is] moving from a model that was formerly product-oriented and geography-oriented to something that is global and customer-oriented, and that's a major challenge. This is a large organisation, and [that] requires rethinking everything.

Bernard Mathaisel: At Ford there are parallels to what Gary has described and then there are some major differences. [Ford is] a world-leading consumer company that offers automotive products and services. And [it is] shifting from the focus on just automotive to one with a heavy emphasis on better understanding consumers and how to take their demands and translate them into vehicles and other services. A major challenge is to prepare the technology and infrastructure to provide the company with its revised business practices.

Steve Sheinheit: Chase is a bank with over $360 billion in assets. It's in 52 countries and most of the states in the US We have 32 million customers and 73,000 employees around the world. So that's large. When you think about IT strategy, the first reaction is it's got to be integrated with business strategy. For financial services, this is [especially critical] because for a lot of our products and services, technology is the business-the IT strategy is really derived from the business strategy. Now we need to understand how to move our company to an e-business kind of strategy. You really have to change the whole company to understand that it is a 7 by 24 world, 365 days, for customer service, for product capability, for providing services. The information that we have about our customers, our relationships, all has to integrate together so that when you call, we can see your full relationship and everything you do with the bank.

Patrick Zilvitis: Gillette is a global company-we're on the shelves in over 200 countries. And our [corporate partner] customers, who are the common thread among all of our brands, are consolidating rapidly, moving across country borders.

We are focused on becoming a single face to our customer, so we've had to really restructure our business processes. Our primary focus has been managing the supply chain across brands and geographics, and we also need the ability to have common business processes on a global basis. So we're about two-and-a-half years into a five-year program to have supply chain management systems on a worldwide basis across brand, across geography. We're also working to be able to capture that data and turn it into information, and then knowledge, to allow us to manage our business better so that we can have a single view of our customers. Our largest challenge right now is change management: getting the business to sponsor this, getting the business to agree that IT is an investment, not an expense, and that it enables business strategy.

Gary Hamel: I don't have to wake up every day worrying about how to manage the kind of unbelievable complexities that you guys have to manage, so I start by being extremely humble here about what you are all wrestling with. It's really mind-boggling.

One thing that sets the context for all this is an ever-growing pool of mediocre companies out there and an ever-diminishing pool of truly outstanding wealth creators. So I start with the bias of saying that at least one of the objectives here is to determine how we can use technology to fundamentally drive new wealth creation. I think the question is increasingly, How do you recognise that not only product life cycles are getting shorter, but strategy life cycles are getting shorter [as well]? The real competitive risk is not inefficiency anymore, it's irrelevancy. The whole focus of value creation and wealth creation will have to move from efficiency to innovation. We are poised at this transitional point between using information technology largely as a way of driving out cost in today's business models and using it as a catalyst for tomorrow's business models.

So for me the challenge is, how do we think about CIOs not as chief information officers but maybe as chief imagination officers, because clearly technology and the things that you are all managing is central to the creation of new business models.

And what we see increasingly is that competition is not between products and services; it's between competing business models. I think one of the huge challenges for CIOs is how to provoke that level of dialogue in their organisations.

Focusing on the Customer

Sheinheit: As I talk about the issue of changing a company and having the ability to move our technology and our thinking into an electronic kind of world, clearly that [encounters] a certain resistance within the company, so there's a certain inertia. One of our challenges is freeing up the funds in order to invest in those [e-business] technologies. We tend to green the field a bit, in that we take some of the best and brightest and [enable them] to build a new Internet kind of environment. We just recently spun that [e-business] group off and-in a very rapid time frame-[are changing] the whole Web [approach] of the bank. So there is some of that creativity that goes on. But it's not an easy thing to free up capital. Knowledge management is also a critical success factor, but it's really knowledge management about our customer in order to be able to invent new products and services and provide higher levels of service.

Hamel: I think you've put your finger on almost the pivot between the old industrial economy and the new economy, which is the sense of who is ultimately going to control the customer information. I don't read the tea leaves at Amazon.com, but it seems to me that one of the things they're saying is, "We're not about selling books or actually selling anything else, we're about consolidating all the information about what individuals buy."

One of the interesting things in so many industries, though, [is] that the focus on cost has so undermined the provision of truly outstanding service that I wonder if some companies are already behind the curve in that they have "productionized" the customer interface to a point where it may now be [difficult] to try to rebuild that with customers-to build deep and powerful emotional linkages with them.

Mathaisel: I think the airline industry is a very good example, where perhaps the airlines have lost the focus on consumers and have become so enamoured of some of the technology that they're beginning to actually distance themselves from consumers. Try to guess which day, which hour is best to get a fare from New York to Los Angeles. What you discover is that it's become such a game that consumers are getting irritated, and when they get irritated, they get Congress worked up, and when Congress gets worked up, industries are going to get scrutinised, if not suffer.

CIO as Agent Provocateur

Zilvitis: I look at myself as an educator and a missionary as much as anything else. I've heard someone describe it as trying to walk a fine line between being a leader and [being an enabler]. Through your knowledge of information technology, you can enlighten somebody in the business in terms of how they can either transform or enhance their business with the use of it; but then you have to step back, let them take the leadership role or the championship role and you become the enabler. [The latter] is an interesting role, but if we don't step up to the leadership part, I don't believe anybody [else] in our companies will. We have the unique [ability] to take a look at both sides of the street.

Hamel: I think that is a hugely important role for all of you. I would imagine that most of you from time to time are seen internally as provocateurs.

Mathaisel: If you want to choose a simple but very effective means to transform a company, you take an emphasis such as the one at Ford and say that [it is not] an automotive products and services company, [it is a] world-leading consumer company, and then drive that through all the business models and figure out what that means. But if [the business approach] isn't driven [by] the CEO with some of his perspective and his skill and his motivational ability, it's going to be very hard.

Hamel: How do you bring the whole job of the CIO even closer to the front lines-how do you make a difference in people's lives here? You've all described yourselves as owning processes. I think maybe a decade ago you would've described yourselves as owning the IT infrastructure. I wonder if a decade from now maybe we're going to see you as owning the customer relationship in a way.

Sheinheit: For financial services, to think that the IT function would own the customer relationship stretches things. The issue of what the products and services look like and how to provide them to the customer is a business event. I think the technologists have enough to do. Energising the business and enabling new ways of doing business, as we're discussing-those are all things we can do.

Zilvitis: One of the challenges that we have is managing information all along the way, including supporting a launch of a product. Just as an example, I believe that we [in Gillette's IT department] were an integral part of the Mach 3 team in that we brought the Sensor [disposable razor] to market in 1990 and it took us three-and-a-half years to cover the globe. Mach 3 will have launched in every location where we sell products in 18 months. A lot of that has to do with taking it from the lab and putting it on the shelf and every aspect of that. If we weren't involved with the developers and with the manufacturing people, in terms of automating the lines and improving the speed of the lines, and with the distribution arm and in touch with our customers around the world and had shelf space in the right locations in the right stores, all of which is enhanced by our use of information technology, we wouldn't be able to do that. That's not something that is driven by IT, that's something that's enabled by IT. But some of the lead ideas come as a result of the intersection of good business minds with the IT people who know how to put some of these things to work. That's part of our jobs, being that catalyst.

Engaging the Business

Hamel: What are the things that have worked best for you in terms of getting a deeply engaging conversation with business people where you really can pool the two talents and come up with insights? How do you get that kind of conversation going?

Zilvitis: We meet quarterly with the operating committee of the company: That's the CEO, the COO and the executive vice presidents who run our major business groups. It's my agenda and I typically will bring in somebody from outside Gillette to talk about some new technology or use of the technology. I try to find someone who is provocative, educational-who takes away the mystery. So I've gone out of my way to try and make environments where [senior executives] can be comfortable with technology.

A few years ago I introduced [the idea of] having an IT strategic business plan as well that turns into a one-year operating plan and a five-year strategic plan integrated with the business. Once you can get to the point where senior management is really comfortable with discussing these things, and you can lay out a provocative plan that requires some investment on their part-not just intellectual investment but material investment-then you can turn IT into a strategic advantage for your company.

Banks: One thing that is unique about IT is that very few people have the depth and breadth of responsibility that we have. Across geography, across processes and various business units, most of the heads of those units are focused on one particular aspect of the business. Because of the integration and nature of our jobs, we really have to deal with all of it. So there's this opportunity to sell all sides of the business.

The CIO of the Future

Hamel: How do you think the role of the IT profession is going to be different as we look into the future?

Sheinheit: One of the things that I see potentially changing is the question of skills and skills changes. If you really take a look at the way technologies are evolving, does the CIO and the IT function become more of an integrator of outsourced kinds of functions to bring specialties into the company?

Banks: I see very few people dedicated to IT; I see lots of hyphenated jobs out there. Look at the way the big software packages work-you don't program them anymore. You don't do traditional systems design. The infrastructure is largely outsourced. We may all be financial analysts or product developers or whatever.

Mathaisel: We need to be careful and not let a comment like, "IT professions are dead," appear in a magazine like [CIO]. I think what we can say is that organisations whose business is IT will probably have lots of [IT professionals]. Organisations that are not fundamentally IT but that produce other services and products that depend on IT may see a shift of talent much more to the business model enablers.

Sheinheit: And saying they're dead is a negative way to look at it. I view this [shift] as extremely positive.

Banks: I hear you saying we may be more like architects and less like plumbers.

Sheinheit: Correct. I think that's a wonderful development.

Zilvitis: That would be nice. But I think until some of our vendors take the complexity and all the layering out of the products, we're going to be plumbers too.

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